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ENTRY-LEVEL - Entrepreneurs

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August 2016


Following in the footsteps of the Ice-Watch with a fiercely on-trend, elegant and vintage touch, brands like Daniel Wellington, Shinola, Briston, Nixon and new startup William L. are disrupting the status quo in a segment whose very nature is to follow the rapid fluctuations and vagaries of fashion. Portrait gallery.

Nixon sponsored athletes: JP Walker (snowboarder), John John Florence (surfer), Curren Caples (skateboarder), Nicolas Muller (snowboarder) @Nixon
Nixon sponsored athletes: JP Walker (snowboarder), John John Florence (surfer), Curren Caples (skateboarder), Nicolas Muller (snowboarder) @Nixon

Just for a change, we thought we’d leave the Swiss watch industry to its own devices, and take a look at some of the brands churning out millions of watches – generally not Swiss made, and obviously not mechanical – which are taking the younger generation by storm, and which have enjoyed spectacular growth in recent years. A number of Swedish, American and even French companies have emerged in the last five years in the affordable watch segment (under 500 dollars) with extraordinary success, conquering and occupying the wrists of millions of stylish young urban types in a very short time. In a way, they are the heirs of the Fossils and Festinas of the 1990s.

But first, let’s calibrate our watches: while 95% of watches over 1000 francs are Swiss made, last year the 28 million certified Swiss watches represented a little more than than 2% of total worldwide output, which is estimated at around 1.2 billion pieces. The vast majority of these watches are produced in China and Hong Kong, with Switzerland, the United States and France some way behind.

 THE TUMBLR GENERATION

Towards the end of last year many column inches were devoted to discussing the fact that smartwatches had overtaken traditional Swiss watches in terms of production volume. However, the upcoming generations of trend-setters appear to be far more attracted to quartz watches such as those made by Daniel Wellington, Shinola and Briston than to Samsung’s latest connected gadgets. Vintage is a strong trend, and a legion of affordable brands are happily surfing the wave, plying their wares in concept stores frequented by certain well-defined tribes with a keen eye for design, strong environmental and social awareness (despite the fact that many of these watches are made in China...), a nostalgic and retro-futurist bent, and also a desire to unearth new, exclusive and good value brands to help them stand out from the crowd. This is the Uber generation, the Tumblr generation, the hipster generation, the NATO-strap-wearing generation... call them what you will. The shop Chez Maman in the bohemian Marais quarter of Paris is a perfect place to observe them in the wild (see sidebar). There, a vintage Casio is considered far more desirable than an Apple Watch. These brands have understood the major role that social networks can play, and they exploit the latest technologies to sell their elegant, retro and somewhat nostalgic watches.

 STAYING POWER

These young companies going all out to capitalise on the ephemeral trends of the moment face a considerable obstacle, one that is intrinsic to their very nature: will they still be around five or ten years from now? Their challenge is to find a secure footing in an ultra-competitive watchmaking landscape. How many former leviathans of the industry are now resting in peace in the dusty pages of horological history books? You only have to leaf through a watch magazine from the 1980s or 1990s (Europa Star for example) to work that out. Look at Ice-Watch, which made its name a few years ago producing fresh, colourful and playfully flashy watches. It has been forced to adapt to the latest vogue for vintage by bringing out some new, more classic collections. Michael Kors (whose watches are made under licence by the Fossil Group) enjoyed a surge in popularity, which now seems to be ebbing. Some of the most best-selling concepts in the fickle world of high street fashion have ended by tumbling precipitously into landfill. How long before today’s hottest trends end up there too? The strength of Swatch, which is active in a similar niche, lies in its ability to keeping turning over new designs, ensuring it remains perpetually on-message. Its iconic status, its role as “saviour” of the Swiss watch industry and innovations such as the Sistem 51 and other limited series, have helped it secure a greatly envied universality, which even attracts some high-end collectors, where many of its competitors tend to become stale, running out of new ideas, and eventually fall out of favour. Fossil Group relies on the high profile of its fashion brands to introduce them into the watch industry under licence. The critical size of its portfolio (it has around fifteen brands under licence, making it the fourth-biggest watch group worldwide) enables it to keep up with changing trends. 2015 was nevertheless a tough year for the group, with the double whammy of the smartwatch’s début, along with a host of rivals in the entry level sector, some of which are profiled below.

 ICE-WATCH, THE PARADOX OF “GLOSSY PURITY”

ENTRY-LEVEL - Entrepreneurs

Perhaps one of the most impressive newcomers of the last decade is Belgian brand Ice-Watch. It incarnates the heights of success that are the just reward for bringing out the right product at the right time. Its brightly-coloured watches succeeded in ruffling Swatch’s feathers, and the company managed to hold its own against the watchmaking giant’s legal challenges. We asked Jean-Pierre Lutgen, its founder, how he explained this marketing breakthrough. His answer: because he came from outside the watchmaking world. “We brought a new approach to communication, presentation and sales, a genuinely different point of view, to an existing product.” This year, the company is aiming for consolidated revenues of 50 million euros, perhaps even more. “For the last three years our sales have stabilised at more than 1.5 million watches per year. Our revenues are growing steadily as we add new collections and start to look at greater vertical integration.”

These days, however, the fashion is veering towards vintage chic, rather than colourful plastic. Will the company lose ground? Jean-Pierre Lutgen refuses to be drawn. “When we brought colour back to the world of watches, many watchmakers followed our lead. Now they are off chasing the vintage wave, leaving us virtually alone with our colour-loving clients. Nine years after the company was founded, I believe that Ice-Watch as a brand is here to stay.” The company has nevertheless launched some more restrained collections, such as last December’s Ice-City. One of its recent models, the City Tanner will, according to the company literature, “delight fans of 70s style with its pure sophistication spiced up with a touch of glossy” and its “minimalist look that combines old-school elegance with modern urban purity.”

 DANIEL WELLINGTON, NEW YOUTH IDOL

ENTRY-LEVEL - Entrepreneurs

These days it’s impossible to get away from Daniel Wellington. Launched in 2009 by Filip Tysander of Sweden, Daniel Wellington (or DW) today boasts annual revenues of more than 200 million dollars, and has made perhaps one of the swiftest transformations from little-known startup to successful highstreet brand. What is its secret? Among other things, its penchant for removable NATO straps, its minimalist dials, its attractive price (thanks to a manufacturing operation based in Shenzhen, China), its unparalleled exploitation of social media and its democratic approach to retailers.

The brand’s back-story couldn’t be more perfect, and it makes for an incredible marketing tool; in 2006, during a backpacking trip across Australia, Filip Tysander met another backpacker named Daniel Wellington, who was wearing a Rolex Submariner with a fabric NATO strap. This chance meeting gave the would-be entrepreneur the idea of developing a highly affordable line (under 300 dollars) with an ultra-simple, minimalist white dial and Miyota quartz movement. The key feature, however, would be the ability to easily change up the NATO strap. The nylon gives it a paradoxically organic feel (despite the fact that it is mass produced). The formula proved a winning one: vintage elegance... for cheap. And it came at exactly the right time.

30-something Filip Tysander was able to use the influence of social media, particularly Instagram, to promote this lifestyle with a young audience. In parallel, while an increasing number of watch brands were neglecting or rejecting traditional retailers they considered not up to the mark, choosing instead to withdraw to their own boutiques and more rarefied circles, the young businessman had no difficulty signing up with any shop willing to take on his brand, which ensured he quickly gained global visibility, with a presence in almost every country on the planet.

 SHINOLA, MAKING AMERICA GREAT AGAIN!

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Shinola was launched in 2011 by Fossil co-founder Tom Kartsotis (who by that time had left the American group), in partnership with quartz movement maker Ronda. Based in the economically depressed city of Detroit, a potent symbol of the United States’ deindustrialisation, the company achieved sales of 100 million francs last year, selling 220,000 watches. A genuine lifestyle brand (it also produces bicycles, leather accessories and notebooks) which makes a third of its sales online, the company is now setting its sights on the rest of the world.

Shinola is based in a historic building in Detroit that once housed a General Motors design centre. It endeavours to source all its materials in the United States and employs local people, often former automobile workers. “I think there’s a genuine movement of young, urban people who want to know where their food or their clothing comes from, and they also want to know about the manufacturing conditions,” notes John Argento, the company’s European director.

For the time being, the majority of  Shinola’s clients are American, and its revenues are split more or less equally between online sales from their beautifully designed website, retail partners and standalone shops. This year Shinola will open its first store in Canada, and it aims to conquer Europe. “We opened our first London store a year and a half ago, and at the same time we began retailing in some major department stores and concept stores like Colette in Paris. At the time, we hadn’t approached any watch retailers outside the United States. This year, we decided to extend our distribution to watch professionals.” You have been warned!

 NIXON, URBAN SURFER

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A little longer in the tooth than the other brands in this summary (it was founded in 1997 in California), Nixon is also enjoying strong growth and is equally at home in an influential concept store like Colette. The American brand is the darling of a very young, very cool clientele, who are also well-informed about watch design. This lifestyle brand prized by surfers and skaters also makes headphones. It is part since 2014 of Trilantic Capital Partners portfolio, and its value is estimated at more than 400 million dollars.

“Purely through word of mouth to start with, and also through social media, which gave it a new dimension, we have succeeded in widening our client base, which is no longer limited to the world of surfing and skating,” explains CEO Nick Stowe. Its products have also evolved. The brand has just launched its first smartwatch, the Mission. It has also extended its women’s collection and embarked upon collaborative ventures, such as the Star Wars collection, which opens up yet more potential buyers. Nixon’s broadly-based collection has ensured it a presence in 80 countries and 10,000 points of sale.

It really is a lifestyle brand. In fact, as Nick Stowe points out, its main competitors are not other watchmakers but accessory brands. “Someone might choose a Nixon to complete their look, but they might equally go for Ray Bans or Vans. Young people are not necessarily looking for a watch, as such; they’re mainly looking for an original product to complement their identity.”

 BRISTON, BRITISH CHIC À LA FRANÇAISE

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Brice Jaunet, an industry veteran (Cartier, Baume & Mercier, Richemont, Raymond Weil, Zenith), founded watch brand Briston in 2012, on a British Sport Chic theme. “I always wanted to be my own boss,” notes the entrepreneur. “And one day, because working for a big group has its ups and downs... at the end of 2009, in the thick of the watch crisis, Zenith decided to let me go. I had the opportunity to take a step back, and I was able to make my dream a reality.”

Before diving back into watchmaking, however, Brice Jaunet took a detour into a different industry: eyewear. And he experienced a technological epiphany. “I had the idea of using a material discovered by the eyewear industry – cellulose acetate – in watches. We offer a complex and innovative product, and we didn’t pick it off a rack of shelving in Shenzhen!” The acetate is made in Italy, the movements are Japanese and assembly is done in Asia. 2016 marked a turning point for Briston, which “did” its first Baselworld. “The reception from the watch community was beyond what we could have hoped for. It really was a wonderful surprise. By the end of the year we will have close to 1,000 distribution partners around the world.”

“We’ve been forced to slow down our new launches, but our development plans for the next five years are full of ideas and possibilities. While I am an entrepreneur, and consequently a go-getter, the idea of slow business makes a lot of sense, and that appeals to me.” It’s certainly a concept whose time has come.

 WILLIAM L. - THE NEWEST ARRIVAL IS GROWING UP FAST

ENTRY-LEVEL - Entrepreneurs

William L., another French brand, is just getting started. The company was also founded by an industry insider: Guillaume Laidet, just thirty years old, and a digital communication specialist who earned his stripes with Zenith, Jaeger-LeCoultre and Girard-Perregaux. His story is compelling; it all began with a family watch. “I was given an old watch, which I restored, and all my friends thought it was amazing and asked me where they could get one. The problem was that this kind of watch was far too expensive for them, without even considering the cost of maintenance. So I set myself the challenge of drawing inspiration from this watch to make something more affordable, costing a maximum of 130 euros.”

A request for proposals was issued in Shenzhen, for a watch that would offer champagne styling on a beer budget, along with a willingness to cut margins more than is usual in the watch industry. The result: vintage chic, a domed crystal and easily interchangeable straps. “But the banks weren’t interested in backing my project. In my opinion, they no longer fulfil their role of supporting the creative economy.” But that wasn’t a problem. Kickstarter came to the rescue, raising 200,000 euros in the space of one month. “That enabled me to finance a far greater production run than I initially intended. And I was also able to go to Baselworld. I was hoping to sell 3,000 watches, but distributors from more than 20 countries placed 100,000 orders! That represents five million francs in revenue.”

To hear him tell it, he was in the right place at the right time, with the right product. The price is also a very important factor. “The risk for the watch industry today is that it continues to offer watches at excessively high prices, and treat its clients like cash cows.” After Kickstarter and Baselworld, the businessman is now looking to manage the company’s growth with his new distributors. “That’s going to be the tricky part. But at least the banks are interested now!”

We’ll take a closer look at some more newcomers – MVMT, Tsovet, Komono and Cronometrics – in a forthcoming issue.

Source: Europa Star June 2016 Magazine Issue